Banks Must Watch Out for Fraud Revelations Amid Pandemic
When markets tanked in 2008, Bernie Madoff's $65 billion Ponzi scheme finally blew up. As the economy begins to tumble under the weight of the COVID-19 pandemic, could more hidden frauds be waiting like land mines to detonate? And what fallout might financial institutions face?
On Tuesday, the International Monetary Fund said it expects the coronavirus pandemic to spur the worst global recession since the Great Depression, with worldwide economic output projected to shrink by far more this year than it did after the 2008 financial crisis.
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Similar risks could again materialize for banks if the pandemic reveals a new wave of fraud, attorneys told Law360.
“A financial institution can be held liable for its role in providing services to a Ponzi scheme,” said Scott Wortman, a Blank Rome LLP consumer financial services partner. “Banks are always going to be tempting targets, especially when you have innocent victims looking for where they can get back their money.”
“Banks Must Watch Out for Fraud Revelations Amid Pandemic,” by Jon Hill, was published in Law360 on April 14, 2020.